The cannabis payment app, CanPay, is taking off due to California’s launch of recreational marijuana, according to Sonoma Index-Tribune.
Cannabis Banking Issues
Cannabis businesses are faced with the ongoing issue of banking and how to receive payments from customers. This has become especially true in light of the current presidential administration’s push to crack down on state sanction marijuana businesses plus the reluctance on the part of the Federal Reserve to validate financial institutions who openly do business with cannabis groups.
As credit unions in states like Colorado are fighting to be recognized as a legitimate option for marijuana businesses to do their banking, CanPay is offering an opportunity for legal cannabis businesses to receive payments from consumers.
How It Works
CanPay was developed back in 2016 in response to Colorado’s emerging adult use marijuana market. The company is a “debit card payment…aimed at cannabis retailers as an alternative to cash.” CanPay’s system offers cannabis consumers an alternative to cash transactions which can be a huge safety risk for the customer and retailers before, during and after transactions.
Customers download a free app to their smartphones which are linked directly to their checking account. "When they go into make a payment or have a delivery with CanPay…the money begins to transfer from their checking account directly to the cannabis business’s checking account.”
In an interview with The Sonoma Index-Tribune, a company said “[b]y utilizing a proprietary network of financial institutions and technology partners that know exactly what kind of business you are conducting, we are able to process electronic debit payments at your store.”
The app is only available on the company’s website because companies like Apple and Google refuse to carry it.
Other States Could Benefit
States like Michigan could benefit from a system like CanPay. The Great Lake state is second only to California with its medical marijuana patient count. With almost 220,000 registered patients in the state’s medical marijuana database, the state has a $837 million medical cannabis industry, according to MLive.com. Like their counterparts in other states, Michigan's medical marijuana business owners are faced with the issue of having to find somewhere to put all of their cash.
Slated to be the next large state to approve recreational marijuana, banking could become an even greater issue for businesses in the state. If voters approve a November 2018 ballot initiative legalizing adult use marijuana the market for Michigan's cannabis industry “is expected to surpass $1 billion sales a year” according to a report by the Detroit Free Press.
There are currently no banks in Michigan willing to bank with the cannabis industry making the issue of safety a concern for law enforcement.
Michigan's marijuana businesses have found a workaround by utilizing financial institutions based out of states like Maryland and Florida.